Spotlight on Payrolls Shines Even Brighter Than Usual This Week

It’s hard to see how the U.S. employment report can garner any more attention than it already does. But that is the case this coming Friday. With the broad swath of June data falling far short of expectations [one big exception being vehicle sales], a major question for the outlook is whether the labor markets are bucking the weakening trend–or confirming it. Expectations are low for the June payrolls number following very sluggish hiring in March through May. The median forecast among economists surveyed by Dow Jones Newswires calls for a gain of only 95,000 jobs. That’s the weakest projection since last September when businesses took a wait-and-see attitude following the debt ceiling debacle and ratings downgrade of Treasury debt. A wait-and-see redux could explain some of the recent weakness in hiring. Large exporters may be wondering how the euro-zone debt crisis as well as the China slowdown will play out, while small business owners may have waited for the Supreme Court health-care ruling to give clarity about future medical insurance costs. Thursday’s Automatic Data Processing Inc. report on private-sector jobs will offer details in hiring by size of firms. If the ADP number falls short of the modest 108,000 jobs expected, economists could downgrade their forecasts for Friday’s payroll number [which includes government workers].